How to Manage Your Trading Team

I've dealt with many professional traders in my long career as a broker, analyst, journalist and educator. Good traders surround themselves with a team of specialists to guide them in their trading decisions. As a broker I had my own team to call on when a trader asked me a question I could not answer fully. Each player on the team has unique talent. The trader is the manager of the team. An economist takes on the role of a leader or quarterback. Fundamentals move markets and the economist researches events and ranks them according to potential impact. An economic report may change sentiment in stocks and ETFs, which may affect interest rates. And what happens in interest rates often has an influence on currencies, precious metals and even energies. Energy prices frequently sway other commodities like grains and softs (coffee, sugar, cocoa etc.). These commodity connections are integral to professional traders. A team should be technically proficient. Each team should have a chartist to define odds for trade types (trend or trendless) and pinpoint entry and exit levels as well as determine risk.

Each year I set aside time during the last two weeks in December to practice and prepare the team to enter the New Year with a plan of attack. As manager I focus on the traits of each sector and the effect, they may have on each other. My list of year-end tasks includes:

  • Compute average ranges for a watchlist. This includes near-term averages for day, week, month and quarter and for comparison research long-term or benchmarks average ranges. The difference between near- and long-term averages may indicate whether price action is likely to be volatile, or it may identify whether a market is set to enter a trend or consolidation phase.
  • The watchlist includes the sectors mentioned above and the correlating ETFs.
  • When it come to stocks and ETFs, focus on the Dow Jones 30 stocks and DIA, SPY, QQQ, IWM, TLT, IEI, GLD, USO.  Plus, the SPDR selects: LB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY.  There are others but this list covers the most liquid and popular sectors.

Be aware of how these markets interconnect, so you will be prepared to react when presented with a critical event. Think dominos, not the pizza though. Markets are often related and a move in one may have a trickle-down effect.

John Seguin, Market Taker Mentoring

Trader Education